[110614.EN.AIR] Airline Sector Faces Expanding Competition: PricewaterhouseCoopers

FIERCE competition from low cost carriers will mark the life of the airline industry in years to come, according to international accountants PricewaterhouseCoopers (PwC) in their annual report on the sector, Tailwinds.

"The overall industry picture is favourable, but with competition on the rise, driving efficiencies by becoming a 'connected airline' can help airlines navigate and stay ahead," said the Tailwinds report.

Global airline revenues are expected to have reached a new high of US$708 billion in 2013, driven by increased passenger revenue resulting from more flights and scheduled passengers, the report said.

Low cost carriers continue to gain market share, increasing to over 25 per cent in 2013, restraining the yields of the older carriers.

But airlines also saw lower fuel prices, while there has been an increase in labour and maintenance costs.

"Middle East carriers are likely to become more of a competitive threat on international routes, as they are well-funded and have lower fuel costs and an advantageous geographic position," said the Tailwinds report.

Middle East carriers have placed a record number of orders for wide-body aircraft, signaling expansion.

"Competition is also likely to increase as airlines push for more joint ventures and antitrust immunity agreements to target international growth.

Low cost carriers can be expected to offer more direct flights on international routes said the PwC study.

Said PwC transport analyst Jonathan Kletzel: "Airlines can make small incremental improvements, or take bolder steps to become a 'connected airline', applying technology and analytics to achieve advancement."

Mr Kletzel defines a "connected airline" as one in which "information is available to stakeholders to improve decision-making, prevent or accelerate the resolution of issues and turn data into actionable information."

This sharing of actionable data is critical to building a "connected airline", he said, as it improves air- and land-side operational coordination.

Source : HKSG.